Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take – 3 September- Bond buyers' strike continues as US 30yr hits 5%, Gilt yields hit fresh 27yr high, NVDA down + Alphabet up
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- Global bond selloff continues as US 30yr yield hits 5%, gold hits another record high
- UK long gilt yields hit fresh 27-year low with sterling under pressure again
- European equity markets stage mild fightback after Tuesday's sharp losses
- Wall St finishes down as Nvidia extends decline post-earnings, but Alphabet and Apple get a boost as Google gets to keep Chrome
Unease in global bond markets is rattling investors , with stock markets falling Tuesday in a broad-based sell-off as bond prices plunged and gold extended its rally to hit fresh all-time highs. The FTSE 100 finished down 0.9%, while the DAX shed 2.2%. US stock markets fell too with the S&P 500 breaching the 20-day moving average as it declined around 1.5% to a low of 6,360 at one stage before finishing well off the lows at, 6,415, or –0.7% for the session. The Nasdaq tested the 21k support before paring half its losses to finish down 0.82%, while the Dow fell 0.55%, again well off its lows of the day below 45k. Asia followed lower but we have a little bump higher this morning in Europe with the FSTE and DAX up about 0.25 each, and US futures are flat to marginally higher. The court decision to allow Google to keep its Chrome browser lifted shares of Alphabet after-hours sharply by around 7%, which has given a bit of a tailwind for tech shares, with Apple following through with a 3% pop as it means it can keep its search deal with Google.
It was a rough old day for the pound, shedding over 1% for its worst day since April to hit a one-month low against the dollar and the euro. The move down was one of the worst we've seen all year. We saw a 1.1% decline for cable back on June 17th, when Iran war fears were highest. Before that the Liberation Day tariff shakeup left the pound down 1.57% and 1.33% on April 4th and 7th. Technicals look negative with a fresh low in this morning and bearish MACD crossover from yesterday's slip.
It was a rough old day for the pound, shedding over 1% for its worst day since April to hit a one-month low against the dollar and the euro. The move down was one of the worst we've seen all year. We saw a 1.1% decline for cable back on June 17th, when Iran war fears were highest. Before that the Liberation Day tariff shakeup left the pound down 1.57% and 1.33% on April 4th and 7th. Technicals look negative with a fresh low in this morning and bearish MACD crossover from yesterday's slip.
Sterling’s move is a reflection of gilts. The picture for bonds is not pretty, although so far the moves remain fairly orderly. Globally, whilst stocks are taking a bit of a hit for now, this is only really going to be material for equity markets if there’s a liquidity issue –which does not seem to be a problem right now. It could show up later on.
However, this is probably more of a slow-motion train wreck than the flash in the pan Truss episode, and far more reflective of fundamentals. The UK 30yr yield hit a 27-year high clear of 5.7%, and has moved higher again this morning to a high of 5.756%.
It’s not just the UK of course – the US 30yr just breached 5%, a key threshold you feel. Worries that those vast tariff revenues might need to be repaid could have been a factor in the US following the court ruling there. That’s heaped on deeper worries about Fed independence and economic policy uncertainty, but perversely I guess it means that Trump winning a swift Supreme Court decision would be good for Treasuries. Yields on French, German and Japanese bonds have also shot higher as the entire complex has looked increasingly shaky. German fiscal expansion, debt trajectory worries in France and political chaos...it feels like a buyers’ strike.
However, this is probably more of a slow-motion train wreck than the flash in the pan Truss episode, and far more reflective of fundamentals. The UK 30yr yield hit a 27-year high clear of 5.7%, and has moved higher again this morning to a high of 5.756%.
It’s not just the UK of course – the US 30yr just breached 5%, a key threshold you feel. Worries that those vast tariff revenues might need to be repaid could have been a factor in the US following the court ruling there. That’s heaped on deeper worries about Fed independence and economic policy uncertainty, but perversely I guess it means that Trump winning a swift Supreme Court decision would be good for Treasuries. Yields on French, German and Japanese bonds have also shot higher as the entire complex has looked increasingly shaky. German fiscal expansion, debt trajectory worries in France and political chaos...it feels like a buyers’ strike.
Longer-dated bond yields in advanced countries have risen, pressuring stocks, but the UK is seeing its currency weaken at the same time, which is extra concerning. Investors want a higher risk premium for debt and for sterling. GBPUSD finished off the lows yesterday but made a fresh low this morning as yields climb again. Will have more on this in another post.
Companies
Ashtead shares rose as the company raised its cash flow guidance despite a drop in profits, whilst the company also confirmed plans to relist on the NYSE in March. Operating profit fell 7% but free cash flow rose from $161mn to $514mn.
Nvidia fell below its 50day line at 171...last time it closed below here was DeepSeek and it shed about another third before bottoming...also testing the Aug 20th low at 168.80 on that dragonfly doji...possibility of technical break here.
Nvidia fell below its 50day line at 171...last time it closed below here was DeepSeek and it shed about another third before bottoming...also testing the Aug 20th low at 168.80 on that dragonfly doji...possibility of technical break here.
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